Why it's important to use ROI throughout the capital investment lifecycle
Companies must be able to track return on investment (ROI) across the capital investment lifecycle, particularly when planning a portfolio or annual budget and again when reviewing formal approval requests.
While the initial budgeting process should identify the most valuable projects, formal reviews allow managers to re-evaluate priorities and understand each project’s rank as it unfolds. Calculating ROI is also critical in post-completion reviews, to understand how each investment performed against expectations, to improve future results.
Proper ROI analysis can drain resources, since it often requires support from finance. Leading companies adopt standard metrics and calculations, checking them with “scrubbing teams.” The best use tools to calculate ROI automatically throughout the capital investment lifecycle – reducing errors, increasing transparency, and freeing up time for project managers and finance alike.
This is piece is part of a larger article recently co-authored by Finario and McKinsey & Company. To access the full article, click here.
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